Porter and Porter

[2017] FamCA 669

FAMILY COURT OF AUSTRALIA

PORTER & PORTER [2017] FamCA 669

FAMILY LAW – PROPERTY – Enforcement of Orders – Where there is an application to enforce property settlement orders – Where an application has been foreshadowed under s 79A of the Family Law Act 1975 (Cth) contesting the validity of the property settlement orders – Where the Court did not exercise discretion to grant an enforcement order where it may give preference to one creditor over others – Where the application is dismissed

Family Law Act 1975 (Cth) s 79A
Real Property Act 1900 (NSW) s 57(2)(b)

APPLICANT: Ms Porter

RESPONDENT: Mr Porter

INDEPENDENT CHILDREN’S LAWYER: Ms Maitland

FILE NUMBER: SYC 4014 of 2012

DATE DELIVERED: 10 August 2017

PLACE DELIVERED: Sydney

PLACE HEARD: Sydney

JUDGMENT OF: Loughnan J

HEARING DATE: 10 August 2017

REPRESENTATION

SOLICITOR FOR THE APPLICANT: Ms Weate

SOLICITOR FOR THE RESPONDENT: Ms Chase

SOLICITOR FOR THE INDEPENDENT CHILDREN’S LAWYER: Ms Maitland

Orders

1. The proceedings are listed at 9.30 am on 28 November 2017 for the making of trial directions.

2. The parties are excused from personal attendance and leave is granted to the legal representatives to attend by telephone if they wish on that day.

3. The Application in a Case filed 24 July 2017 is dismissed.

Note:  The form of the order is subject to the entry of the order in the Court’s records.

IT IS NOTED that publication of this judgment by this Court under the pseudonym Porter & Porter has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).

Note: This copy of the Court’s Reasons for Judgment may be subject to review to remedy minor typographical or grammatical errors (r 17.02A(b) of the Family Law Rules 2004 (Cth)), or to record a variation to the order pursuant to r 17.02 Family Law Rules 2004 (Cth).

FAMILY COURT OF AUSTRALIA AT SYDNEY

FILE NUMBER:  SYC4014 of 2012

Ms Porter

Applicant

And

Mr Porter

Respondent

EX-TEMPORE JUDGMENT

1. These are proceedings for orders in the nature of orders to enforce property settlement orders.  The wife filed an application on 24 July 2017 in which she sought that the husband pay arrears of mortgage instalments; that a property be sold and that the sale proceeds be dispersed in a certain way; that some artwork be sold and that the husband be restrained from transferring, selling or disposing the artworks until that happens.

2. The wife’s application was given a return date in September 2017 by a registrar.  There was an application to review that decision of the registrar.  That application was granted, leading to the proceedings being before the Court today. 

3. The background to the proceedings has the parties married in 2004 and divorced in 2012.  They have three children, B, C and D, who are respectively 11, nine and seven years of age.  B is affected by Down’s Syndrome.  The parties reached agreement on parenting and property settlement orders and those orders were made on 20 June 2014.  The husband signed the consent document on around the 19^th of the previous month.  The operative order in relation to property settlement was that the husband purchase a home for not more than $2 million and that it be held as to 75 per cent interest by the wife and 25 per cent by the husband.

4. The parties, in fact, contracted to purchase a property at Suburb E on 6 June 2014, a fortnight before the orders were made, for $2.310 million, and the purchase was completed in the names of the parties as to 65 per cent in the wife’s name and 35 per cent in that of the husband.  That purchase settled on 1 August 2016. 

5. The husband says that when the orders were made, the parties had no net assets.  It is unclear whether there is a surplus of assets over liabilities today.  The husband filed a very confusing updated Financial Statement on 22 June 2017 in which he said that his income was $8,800 a week, his expenses were $10,200 a week, that he had assets of $3 million, superannuation valued at $400,000 and debts of $4.2 million.  Therefore he deposed to a shortfall of income over liabilities and of assets over debts.

6. A notice was issued to the parties pursuant to s 57(2)(b) of the Real Property Act 1900 (NSW) in relation to the Suburb E property, and I understand that the notice expires in two days’ time. The husband says that he and his current partner live in a property at Suburb F, and a s 57(2)(b) notice has also issued in relation to that property.

7. The wife was excused for personal attendance at Court this afternoon and the husband is also not present.  The husband has instructed his solicitor to say that he is in negotiations with the Commonwealth Bank and that the property occupied by the husband is being sold and marketing is underway.  Although there is no corroboration of it, the husband is hopeful that the bank will hold off taking action on the Suburb E property occupied by the wife and the children, on the basis that the other properties are sold.

8. The other property that the wife wants sold is a property at Suburb G.  It seems to be owned by a company that is not a party to these proceedings.  It is now asserted that the Suburb G property is held as an asset of a superannuation fund.  The relevance of that is that if some step is taken in relation to that property, it may render a self-managed superannuation fund noncompliant and that could cause substantial problems in relation to the tax effectiveness of the investment.  For the purposes of today, the owner company is not a party.  It has to be served, and no order can be made. 

9. Of greater concern is, as I have said to the parties, that on the face of the orders made in 2014, they may be made without jurisdiction.  The Court’s property settlement power is to change interests in property. That requires the existence of those interests. The orders of a superior court stand unless challenged, but this is a court of limited jurisdiction.  If an order is made without jurisdiction and there is a challenge to it, that order is effectively a nullity.

10. An application has been foreshadowed seeking orders under s 79A Family Law Act 1975 (Cth) to set that order aside. On the face of the documents, there is strong support for that application being granted. In any event it is a nonsense to enforce an order that may be a nullity. In any event, even those hurdles were overcome, as I have said to the parties, enforcement is a discretionary matter and the court has to be comfortable that the proposed orders are proper. The orders that are being sought run the risk of giving a preference to one particular creditor over others. In circumstances where the court is told that there may be a shortfall, then notice should be given to known creditors.

11. The overarching worry for the parties is that further legal expense is being incurred where there may be a shortfall of assets over liabilities.  On the wife’s case there has been a failure to pay spousal maintenance and to meet the obligations arising under a child support agreement that has been registered with the Child Support Agency.  That has daily consequences and where private school fees are not being paid, that could embarrass C and D.

12. Suffice it to say, it is not appropriate to make the orders sought.  The bare order requiring a payment would ignore the fact that the court must be confident that such an order can be complied with.  The argument for the wife is in effect that the husband is earning a lot of money and there is evidence to support a finding that he has net annual business income of nearly half a million dollars.  However, the documents reveal that there are also very significant outgoings.  On the other side of the case there is a reference in the husband’s material to the wife returning to paid employment.  No doubt that is a matter that will agitate the parties.

13. For the purposes of today, the Application in a Case filed 24 July 2017 is dismissed.

I certify that the preceding thirteen (13) paragraphs are a true copy of the extempore judgment of the Honourable Justice Loughnan delivered on 10 August 2017.

Associate:

Date:  22 August 2017